[Yang Nak-gyu's Defence Club] Overseas Helicopter Procurement Project... Need for Measures Against Favoritism Controversy

Lockheed Martin's F-35A

[Asia Economy Yang Nak-gyu, Military Specialist Reporter] As our military continues to decide on the procurement of overseas helicopters, there are calls for institutional measures such as exemption from liquidated damages for foreign defense companies.

On the 15th, the Defense Acquisition Program Administration (DAPA) held the 132nd Defense Acquisition Program Promotion Committee (DAPPC) chaired by Defense Minister Seo Wook to review and approve the selection of the MH-60R model for the Navy’s second phase of maritime operation helicopter project. The Sikorsky Seahawks, totaling 12 units with a total project cost of 960 billion KRW, are scheduled to be delivered by 2025. DAPA plans to sign the contract within this year.

On the other hand, the Army has halted the performance upgrade project for its CH-47 large mobility helicopters, opting instead to newly procure overseas helicopters. DAPA explained, "After comprehensively considering schedule, performance, and cost, the DAPPC decided to discontinue the CH/HH-47D performance upgrade project at this meeting," adding, "We will promptly proceed with follow-up projects in consultation with the military to prevent any capability gaps."

The total number of large helicopters to be procured from overseas is 10 units. Including additional helicopters, the total is expected to be around 17 units. If the project proceeds, candidates will include Boeing and Lockheed Martin from the U.S., and Leonardo and Airbus Helicopters from Europe. Boeing is expected to propose the latest 'Chinook Block II,' while Lockheed Martin will likely put forward the CH-53K King Stallion, produced by its subsidiary helicopter manufacturer Sikorsky.

The problem is that there are no sanctions if foreign defense companies unilaterally evade responsibility. When Lockheed Martin’s F-35A was selected as our military’s next-generation fighter in 2013, it agreed to provide one military communications satellite as an offset deal. However, it delayed the project by one year and six months by demanding excessive cost sharing from our government. In response, DAPA held the 97th DAPPC in November 2016 and announced, "The 'Military Communications Satellite Project,' which was suspended as part of the offset deal for introducing Lockheed Martin’s F-35 fighter, will be implemented as originally planned." However, it also stated, "The project will resume on the condition that no responsibility for the delay will be imposed," which led to criticism that Lockheed Martin was being favored. At that time, DAPA did not disclose the original contract amount or how much the project costs had increased.

DAPA has raised performance bonds for high-priority projects to prevent recurrence of such incidents, but there are criticisms that this has limitations. To enhance the accountability of foreign defense companies, there are calls to abolish the exemption criteria for liquidated damages. Liquidated damages are a type of penalty imposed by DAPA when defense companies fail to meet delivery deadlines. Inside and outside the military, there is backlash over the severe disparity in liquidated damages imposed on domestic versus foreign defense companies, and the exemption criteria are criticized as ambiguous, described as "like earrings that fit wherever you put them." Article 26 of the National Contract Act, which specifies exemption reasons for defense companies, includes natural disasters, government policies, strikes, fires, wars in the exporting country, unforeseen technical supplements due to national reasons, and specification changes.

An industry official said, "If regulations differ depending on the situation for domestic and foreign companies, it inevitably leads to issues of fairness and equity," adding, "Clear standards are needed."

This content was produced with the assistance of AI translation services.